(1) Max out 401k(s) - $24,981 (71%) (goal is $35,000)
(2) Max out IRA(s) - $10,631 (97%) (goal is $11,000)
(3) Add to e/r fund - $7,600 (76%) (goal is $10,000)
(4) Pay down mortgage - $3,320 (66%) (goal is $5,000)
(5) Trading account fund - $50 (1%) (goal is $5,000)
(6) House projects - $1,900 (63%) (goal is $3,000)
Total: $48,482 (70%)
Posting a few days early as I was working on our personal finances this morning. We are still about $3200 behind on where we should be. We also have some unexpected upcoming expenses for Rental #3 (more about that later).
While I feel like we are working hard to catch up, doubling up on our mortgage prepayments, throwing money at the 2013 IRA fund, we are still $3200 behind as were were last month.
We also have to work on our taxes this weekend (Ugh!, my least favorite thing to do) as we have our appointment next week with the CPA and the deadline to file, with our extension is October 15, 2013.
Have a great weekend everyone!!
Friday, September 27, 2013
Wednesday, September 25, 2013
An Interesting Follow Up - PowerBall
I found this NBC.com followup article on colorful PowerBall winner Wild Willie an interesting read.
As I've posted before, I'm not a fan of lotteries at all. So, it was interesting to hear Willie and his wife's take on the $4 Million they netted after taxes, fees, etc. as a curse. Willie further noted that $4 MM is not much money these days.
Based on their ages, $4 MM should be more than enough for a comfortable retirement, but they have done a lot of the things professionals tell you not to do after coming into big money.
First, if you win the lottery stay anonymous if you can. Not all states and not all games permit one to stay anonymous, but even if you have to give your name out when you collect your check, meaning its a public record, you can avoid appearing on the Today Show and engaging with the media. Also, some states permit one to collect a lottery winning via a Trust, which also can help with gifting and taxes (note, I am not a tax professional), and can also help shield the winner from publicity. You want to get advice on that before you sign your winning lottery ticket because, generally, you have to collect in the name of the person/entity that signs the ticket. So you would need to create the Trust before signing the ticket. Now, Wild Willie didn't have control over that since he was part of a lottery pool, but he could have avoided the extra publicity.
Second, most professionals also advise people coming into large amounts of money not to make any quick emotional decisions. Don't quit your job, don't buy a new home, don't buy new cars, etc. Here, Willie did all of that in a month. You need to get some good advice, some good tax advice, some good investment advice and figure out how much your winnings will earn, how much you can draw down from the "principal", what your goals are, etc. before you quit the job. Obviously you not only lose your income stream when you quit your job, you lose health insurance and other benefits that you have to replace on the more expensive open market. And, if you make a rash decision to quit your job and you need reemployment that can be difficult to obtain.
Furthermore, on the issue of new homes, new cars, vacation homes, homes for families, etc. You may think you have $4 MM to spend on that, which you do if you are Willie, but often times lottery winners fail to factor in the carrying costs. Those new homes will create higher utilities and insurance, second set of utilities and insurance on the vacation home, higher insurance on new cars, etc. Not only do you spend your winnings on the goods, but then you have to continue spending to maintain those goods (for many years to come). Think of this as lifestyle inflation on steroids.
Finally, helping family. I can totally understand Willie paying for cancer treatment for his father. I am wondering why that treatment is not being paid by Medicare of Medicaid. Helping your kids pay for a home or a graduate degree can be a good investment or it might not be. Again, professional advice and taking a few months to plan can help one sort these issues out.
As I've posted before, I'm not a fan of lotteries at all. So, it was interesting to hear Willie and his wife's take on the $4 Million they netted after taxes, fees, etc. as a curse. Willie further noted that $4 MM is not much money these days.
Based on their ages, $4 MM should be more than enough for a comfortable retirement, but they have done a lot of the things professionals tell you not to do after coming into big money.
First, if you win the lottery stay anonymous if you can. Not all states and not all games permit one to stay anonymous, but even if you have to give your name out when you collect your check, meaning its a public record, you can avoid appearing on the Today Show and engaging with the media. Also, some states permit one to collect a lottery winning via a Trust, which also can help with gifting and taxes (note, I am not a tax professional), and can also help shield the winner from publicity. You want to get advice on that before you sign your winning lottery ticket because, generally, you have to collect in the name of the person/entity that signs the ticket. So you would need to create the Trust before signing the ticket. Now, Wild Willie didn't have control over that since he was part of a lottery pool, but he could have avoided the extra publicity.
Second, most professionals also advise people coming into large amounts of money not to make any quick emotional decisions. Don't quit your job, don't buy a new home, don't buy new cars, etc. Here, Willie did all of that in a month. You need to get some good advice, some good tax advice, some good investment advice and figure out how much your winnings will earn, how much you can draw down from the "principal", what your goals are, etc. before you quit the job. Obviously you not only lose your income stream when you quit your job, you lose health insurance and other benefits that you have to replace on the more expensive open market. And, if you make a rash decision to quit your job and you need reemployment that can be difficult to obtain.
Furthermore, on the issue of new homes, new cars, vacation homes, homes for families, etc. You may think you have $4 MM to spend on that, which you do if you are Willie, but often times lottery winners fail to factor in the carrying costs. Those new homes will create higher utilities and insurance, second set of utilities and insurance on the vacation home, higher insurance on new cars, etc. Not only do you spend your winnings on the goods, but then you have to continue spending to maintain those goods (for many years to come). Think of this as lifestyle inflation on steroids.
Finally, helping family. I can totally understand Willie paying for cancer treatment for his father. I am wondering why that treatment is not being paid by Medicare of Medicaid. Helping your kids pay for a home or a graduate degree can be a good investment or it might not be. Again, professional advice and taking a few months to plan can help one sort these issues out.
Wednesday, September 18, 2013
2008 - 2013 The Great Recession Check Up - Part III
Okay, so far we are one and one. While we are doing well on our savings/retirement plan, see Part II, our occupation based salary is flat/slightly down after five years, see Part I.
Real Estate
First the good news, we are making decent progress in paying down our primary mortgage. Last year we refinanced into a 15 year term with a 2.75% interest rate which will save us (between the reduced term and the reduced interest) $180,000 over the life of the mortgage.
The other good news we have is that all three of rental properties are rented and paying for themselves.
So, now the bad news. We live in South Florida and our rental properties are located in South Florida and if you know anything about the real estate bubble you know South Florida got hit hard.
In 2008 our primary home was valued at $465,000. At present I have the value at $399,000 which is based on the very thorough appraisal we had done last year as part of our refinance.
In 2008, our three rental properties and our vacant land were valued at a total of $823,920. At present, I have our investment properties valued at a total of $606,350.
So, in total, over five years we have lost, in equity, $283,550. Actual lost equity is likely even higher in that I have no idea if we could sell any of our properties for the current value.
Real Estate
First the good news, we are making decent progress in paying down our primary mortgage. Last year we refinanced into a 15 year term with a 2.75% interest rate which will save us (between the reduced term and the reduced interest) $180,000 over the life of the mortgage.
The other good news we have is that all three of rental properties are rented and paying for themselves.
So, now the bad news. We live in South Florida and our rental properties are located in South Florida and if you know anything about the real estate bubble you know South Florida got hit hard.
In 2008 our primary home was valued at $465,000. At present I have the value at $399,000 which is based on the very thorough appraisal we had done last year as part of our refinance.
In 2008, our three rental properties and our vacant land were valued at a total of $823,920. At present, I have our investment properties valued at a total of $606,350.
So, in total, over five years we have lost, in equity, $283,550. Actual lost equity is likely even higher in that I have no idea if we could sell any of our properties for the current value.
Tuesday, September 17, 2013
2008 - 2013 The Great Recession Check Up - Part II
Yearly Savings Goals
In 2008, we undertook our first annual savings goal, and saved $50,000 (even with my big pay cut). In 2009, we saved slightly more at $50,168. In 2010, we had a bit of a backslide, but we saved $49,325. In 2011, we increased our annual savings by $10,000 and saved $60,060. In 2012, we saved slightly more and saved $62,446.
Retirement Savings
In January 2008, we had a combined $245,795 in 401k savings. Most of that savings, $150,000+, was in my 401k. As of September 2013, we have a combined $606,324 in 401k savings. And, our 401k savings is basically split between the two of us which means Mr. Sam has made significant progress in adding to his 401k savings. The dramatic increase in 401k savings over the past 5 years is due in large part to (1) each of us maxing out our 401k savings year over year; (2) Mr. Sam's awesome match at his prior employer in that he was getting a 20% match for 5 years; (3) continuing to regularly invest in stock based mutual funds during and after the great recession which meant that we bought some great bargains; and (4) the overall recovery of the economy.
In January 2008, we had a combined $7,217 in IRA savings. At that point, all of our IRA savings was under my name. As of September 2013, we have a combined $125,510 in IRA savings. The dramatic increase in IRA savings is due to (1) each of us maxing out our IRA savings year over year; (2) buying stocks at super bargain prices during 2008 and 2009; (3) the overall recovery of the economy.
Monday, September 16, 2013
2008 - 2013 The Great Recession Check Up - Part I
This morning, on the news, there was a story about where we are, as a society and as an economy, 5 years after the great recession.
I actually started this blog during 2008 and went back to read some of my posts during that time. So, I am undertaking our own Great Recession Check Up.
Career and Salary/Benefits
In 2008, both Mr. Sam and I had a job change in that we each changed companies.
While my job change was voluntary, I would say that my departure from my prior company was caused by the recession. Meaning, I could see that my opportunities for advancement were low and the amount of work/projects that I was handling was reduced. As such, I felt like I had to make a change and therefore took a pretty big pay cut in 2008 when I changed companies. But, my career and my life vastly improved even with the big pay cut. Then, in my new company, I ended up taking another smaller pay cut which lasted about another year (which was directly caused by the recession). Since 2010 my pay has steadily increased and I am generally happy with my job, my company and my career. But, I'm still making at least 10% less, I calculate it as 13% but I'm not totally sure, than I was before I resigned from my prior job in 2008.
Mr. Sam also changed companies in 2008. His change was totally voluntary and a good career move for him. He increased his salary and his benefits were great (his awesome 401k match directly contributed to our progress in that area). And, his health benefits were so great that I ended up switching to his plan and we saved about $3000 each year in doing so (over 5 years).
Now, due to Mr. Sam's layoff he ended up taking a pay cut with his new job. He is not happy about the pay cut, but I'm happy he is employed in a job that is a perfect match for his education, skills and background and I'm hopeful that the pay will follow.
As a result, overall, between 2008 and 2013 our compensation from employment decreased.
Thursday, September 12, 2013
2013 Savings Goals - September Update
(1) Max out 401k(s) - $24,233 (69%) (goal is $35,000)
(2) Max out IRA(s) - $9,631 (88%) (goal is $11,000)
(3) Add to e/r fund - $7,200 (72%) (goal is $10,000)
(4) Pay down mortgage - $2,075 (42%) (goal is $5,000)
(5) Trading account fund - $50 (1%) (goal is $5,000)
(6) House projects - $1,800 (60%) (goal is $3,000)
Total: $45,819 (66%)
At present we are @$3,200 behind on our savings goals. I have restarted goal number 4, prepayment of mortgage principal, and if I double up on our payments for a couple of months I can get back on track. I also expect to complete goal number 2 over the next few weeks. We are on target for goal number 3 as well. We will not be able to complete goal number 1, maxing out our 401ks, due to Mr. Sam's layoff. But, I am hopeful that we can add some money to the trading account fund to make up for that shortfall.
Since it is September, and because of Mr. Sam's job situation, I am starting to think about how to close out our savings year such that we can beat last year's savings number ($62,066). We need to save another $16,281 to exceed last year's total. That is going to be a stretch. If we complete goals 1 (by adding to goal 5), 2, 3 and 4 we will reach $17,000.
We shall see.
(2) Max out IRA(s) - $9,631 (88%) (goal is $11,000)
(3) Add to e/r fund - $7,200 (72%) (goal is $10,000)
(4) Pay down mortgage - $2,075 (42%) (goal is $5,000)
(5) Trading account fund - $50 (1%) (goal is $5,000)
(6) House projects - $1,800 (60%) (goal is $3,000)
Total: $45,819 (66%)
At present we are @$3,200 behind on our savings goals. I have restarted goal number 4, prepayment of mortgage principal, and if I double up on our payments for a couple of months I can get back on track. I also expect to complete goal number 2 over the next few weeks. We are on target for goal number 3 as well. We will not be able to complete goal number 1, maxing out our 401ks, due to Mr. Sam's layoff. But, I am hopeful that we can add some money to the trading account fund to make up for that shortfall.
Since it is September, and because of Mr. Sam's job situation, I am starting to think about how to close out our savings year such that we can beat last year's savings number ($62,066). We need to save another $16,281 to exceed last year's total. That is going to be a stretch. If we complete goals 1 (by adding to goal 5), 2, 3 and 4 we will reach $17,000.
We shall see.
Wednesday, September 11, 2013
So, More on the Good News
I wanted to share more about Mr. Sam's new job.
First, the positives. Mr. Sam obtained new employment while he was still receiving severance from his old employer. As such, we never had a real gap in income stream. Mr. Sam also was able to obtain a few weeks of unemployment compensation from the State of Florida and we continue to have health insurance, paid for by his employer, until October.
The new job is with a much smaller company than Mr. Sam is used to working for. But, that will provide him with more autonomy and opportunities for growth. The new position is also an exact fit for his skills and experience. Finally, the new job is located in reasonable proximity to our home (his commute is about the same distance it was before).
Second, the negatives. Mr. Sam is not overly excited about the compensation. While he believes he is being paid within the proper compensation band for his experience, education, etc., he is on the absolute low end with the new employer. Furthermore, the benefits are not nearly as generous as his last job, which provided a 20% match on the 401k along with such awesome health benefits that I opted for their insurance as well. The new company has also had a lot of turn over and flux with leadership, which is not surprising based on their growth and the size of the company. And while the unsettled nature of this company may be a negative as I mentioned above, it is also a positive in that there are some real growth opportunities.
Since this is my blog and not Mr. Sam's blog, I think, overall, that this is a positive step in Mr. Sam's career. While the pay and benefits are a bit reduced, the chance for growth and leadership may mean that he ends up in a higher pay grade within 6 months to a year. And whether or not the pay grade increases, he will be gaining skills and experience (hopefully) that he never seemed to get with his past employers.
First, the positives. Mr. Sam obtained new employment while he was still receiving severance from his old employer. As such, we never had a real gap in income stream. Mr. Sam also was able to obtain a few weeks of unemployment compensation from the State of Florida and we continue to have health insurance, paid for by his employer, until October.
The new job is with a much smaller company than Mr. Sam is used to working for. But, that will provide him with more autonomy and opportunities for growth. The new position is also an exact fit for his skills and experience. Finally, the new job is located in reasonable proximity to our home (his commute is about the same distance it was before).
Second, the negatives. Mr. Sam is not overly excited about the compensation. While he believes he is being paid within the proper compensation band for his experience, education, etc., he is on the absolute low end with the new employer. Furthermore, the benefits are not nearly as generous as his last job, which provided a 20% match on the 401k along with such awesome health benefits that I opted for their insurance as well. The new company has also had a lot of turn over and flux with leadership, which is not surprising based on their growth and the size of the company. And while the unsettled nature of this company may be a negative as I mentioned above, it is also a positive in that there are some real growth opportunities.
Since this is my blog and not Mr. Sam's blog, I think, overall, that this is a positive step in Mr. Sam's career. While the pay and benefits are a bit reduced, the chance for growth and leadership may mean that he ends up in a higher pay grade within 6 months to a year. And whether or not the pay grade increases, he will be gaining skills and experience (hopefully) that he never seemed to get with his past employers.
Tuesday, September 10, 2013
Hopefully I'm Not Getting Ahead of Ourselves
Working on bill paying today, I sent off a $415 mortgage principal prepayment to my friends at CitiMortgage. While, Mr. Sam is only in the early stages of his new job, I have opted to get back to our 2013 plan in full force.
We need to make two extra payments in addition to our regularly scheduled principal prepayment to end the year on target.
We need to make two extra payments in addition to our regularly scheduled principal prepayment to end the year on target.
Thursday, September 5, 2013
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